Annualized Return Calculator for Options: How to Calculate Your Real Annualized Return
It isn't always straightforward to decide between two trading options just by looking at the premium. For example, one cash-secured put could yield a 3% return in 30 days, while another could produce a 4% return in 60 days. At first sight, the trade offering 4% appears to be the better one since the percentage is higher, but the first trade achieves its return in only half the time. This time difference is important because your capital might be available again sooner, giving you the opportunity to look at other possibilities. In this situation, an Annualized Return Calculator is useful since it turns a return obtained over a particular period into an annualized figure which makes it easier to compare trades with different holding periods. The calculation is particularly helpful for traders who work with cash-secured puts, covered calls, and Wheel Strategy positions, as the expiry dates in these cases can vary a great deal. Nevertheless, an annualized figure should be regarded a...